The Deadweight Loss of Social Recognition

56 Pages Posted: 12 Mar 2019

See all articles by Luigi Butera

Luigi Butera

Copenhagen Business School

Robert Metcalfe

University of Chicago - Becker Friedman Institute for Economics

William Morrison

University of California, Berkeley - Department of Economics

Dmitry Taubinsky

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2019

Abstract

A growing body of empirical work shows that social recognition of individuals' behavior can meaningfully influence individuals’ choices. This paper studies whether social recognition is a socially efficient lever for influencing individuals’ choices. Because social recognition generates utility from esteem to some but disutility from shame to others, it can be either positive-sum, zero-sum, or negative-sum. This depends on whether the social recognition utility function is convex, linear, or concave, respectively. We develop a new revealed preferences methodology to investigate this question, which we deploy in a field experiment on promoting attendance to the YMCA of the Triangle Area. We find that social recognition increases YMCA attendance by 17-23% over a one-month period in our experiment, and our estimated structural models predict that it would increase attendance by 19-23% if it were applied to the whole YMCA of the Triangle Area population. However, we find that the social recognition utility function is significantly concave and thus generates deadweight loss. If our social recognition intervention were applied to the whole YMCA of the Triangle Area population, we estimate that it would generate deadweight loss of $1.23-$2.15 per dollar of behaviorally-equivalent financial incentives.

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Suggested Citation

Butera, Luigi and Metcalfe, Robert and Morrison, William and Taubinsky, Dmitry, The Deadweight Loss of Social Recognition (March 2019). NBER Working Paper No. w25637, Available at SSRN: https://ssrn.com/abstract=3350406

Luigi Butera (Contact Author)

Copenhagen Business School ( email )

Denmark

Robert Metcalfe

University of Chicago - Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

William Morrison

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

Dmitry Taubinsky

Harvard University ( email )

Cambridge, MA
United States

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